GUIDE TO GETTING FINANCIALLY FIT FOR YOUR INVESTMENT LOAN

Your Blueprint for Financial Fitness: Unlocking Your Investment Loan Potential

The lending landscape has changed. Forget the old days where a simple estimate determined your borrowing power. Lenders are now scrutinizing every dollar of your expenses, making actual financial fitness more critical than ever for securing your next investment loan.

This shift means a more diligent approach to assessing your real monthly income versus outgoings. The good news? With a clear strategy, you can position yourself as an ideal borrower, ready to seize your next property opportunity.

How to Power Up Your Borrowing Capacity:

Ready to impress lenders and maximize your loan potential? Here’s your essential checklist:

1. Crush Existing Debt: Nothing signals financial strength like a clear debt slate. Prioritise paying down your existing liabilities, especially high-interest culprits like credit cards, store cards, personal loans, and even car loans. Start with the debts costing you the most in interest – this strategic approach frees up cash flow and significantly boosts your attractiveness to banks.
2. Slash Unused Credit Card Limits: This is often a hidden trap! Credit card limits, even if unused, drastically reduce your borrowing capacity. As a rule of thumb, every $1 of credit card limit can erode your potential loan by $3-$4. That unused $10,000 credit card? It could be shrinking your home loan capacity by up to $40,000! Take control: cancel cards you don’t need or aggressively reduce limits to align with your actual spending. This single step could be the difference between securing your next property and missing out.
3. Strategic Spending Freeze (Pre-Loan): Planning a major purchase like a new car, a lavish holiday, or a big renovation? Put it on hold until after your loan is settled. Any significant new debt or large expense prior to your application can signal risk to lenders and directly impact your borrowing power. Patience now means bigger financial wins later.
4. Master Your Money with a Budget: Ignorance isn’t bliss when it comes to your finances. Implementing a detailed budget is your most powerful tool. It not only highlights exactly where your money goes but, more importantly, uncovers opportunities for savings and accelerated debt repayment. Seeing every dollar empowers you to make smarter choices.
5. Reclaim Your ‘Small’ Savings: The Power of Micro-Adjustments: It’s incredibly easy for everyday “incidentals” to erode your wealth. Those daily coffees, purchased lunches, and frequent takeaway meals for the family add up fast. In my experience, a couple can easily spend $20,000 or more annually on these seemingly small costs. Think about that: every four years, that’s potentially a deposit for an investment property! Don’t dismiss the small expenses – they accumulate into significant capital that could be working for you. Pack a lunch, make coffee at home – these simple shifts compound into substantial savings.
6. Accelerate Your Savings Momentum: By implementing the strategies above, you’ll naturally free up more cash. Channel this liberated cash flow directly into your savings. Building a robust deposit fund is not just about having enough; it signals financial discipline and readiness to lenders, putting you in a prime position for your next property investment.